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Delegate Keith Hodges’ Pharmacy Benefits Managers Bill Passes Both Houses, Brings Licensing and Regulatory Oversight

Delegate Keith Hodges, R-98, continued his successful focus on health care for Virginians and small business owners during the 2020 General Assembly Session, with HB 1290 passing both Houses to require licensing and regulatory oversight of pharmacy benefits managers.

“The complex environment of pharmacy benefit managers directly impacts people day to day and they likely have not realized it,” Hodges said. “What this bill does is helps protect patient choice, affordability and access to prescription medication by requiring the middleman between pharmacies, insurance plan sponsors and drug manufacturers to be more transparent about their pricing and processes.”

Pharmacy benefits managers, or PBMs, are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers.

PBMs negotiate with drug manufacturers and pharmacies to control drug spending and have a significant behind-the-scenes impact in determining total drug costs for insurers, patient access to medications, and determining how much pharmacies are paid.

HB 1290 specifically provides that “no person is authorized to provide pharmacy benefits management services or otherwise act as a pharmacy benefits manager without first obtaining a license from the State Corporation Commission.”

In the end, Hodges said, the bill will end the unfair business practices currently in place and offer pharmacy protections and patient access to local pharmacies, while also prohibiting the spread pricing that is driving up the cost of drugs.

The bill was necessary, Hodges said, because PBMs “have increasingly utilized unacceptable and non-transparent methods that limit the ability of Virginia pharmacists to care for their patients and sustain their pharmacy businesses.”

That resulted in higher prices for constituents.

“Transparency helps the market perform better,” Hodges said. “The lack of transparency drives up health care costs. Without transparency, insurance plan sponsors have no way to verify that their pharmacy benefit manager is sharing manufacturer rebates or that they are setting reimbursement rates fairly. That lack of transparency enables pharmacy benefit managers to use their power to increase their profits, often at the expense of the patient and providers.”

In Virginia, 91% of prescriptions are covered by insurance and those medication prices are set by a PBM, not a pharmacy, Hodges said.

Nationwide, these PBMs control the cost of medications for more than 266 million Americans, with only three PBMs controlling as much as 89% of the market.

Some 159 pharmacies have closed since 2018, which limited patient access to care, Hodges said.

Virginia’s 98th District includes Essex, Gloucester, Mathews, Middlesex and parts of King and Queen and King William Counties.